In our recent survey on omni-channel segmentation, 71% of the 47 firms surveyed said that they had already implemented a segmentation strategy to deliver different levels of service to different clients, or that they are discussing one. So what basis are firms using to make segmentation decisions? In our survey, the answer was universally: the size of the client’s investment account.
Among firms that have implemented a segmentation strategy or are discussing one, 100% reported segmenting based upon the size of the client’s investment holdings with the firm. We heard the same response from the participants in our recent study group on Omni Channel Delivery, although one participant reported using the size of the client’s total banking relationship.
The typical firm is setting the account value minimum to be serviced by a traditional advisor at $50,000, but there is a wide range of experience across firms. A handful of firms in the survey have set the threshold at between $10,000 and $15,000, while a few others require the client to have at least $250,000 in investment assets with the firm to work with an advisor.
But using the size of a client’s investment account, or even the size of their total banking relationship, as the basis upon which to make segmentation decisions may not be the best approach. We know from our research on consumer data that the typical bank or credit union has captured only a small fraction of its clients’ investable assets. The rest of those assets are kept outside the institution. By making segmentation decisions based upon the sliver of assets you know about could mean missing the opportunity to capture your clients’ hidden assets.
Look for innovative ideas on alternative approaches to client segmentation in future Highlighters.